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When a creditor country chooses the "debt service reduction" ("DSR") option, the interest rate used to reschedule non-ODA credits is lower than the appropriate market rate, in order to reach the required reduction in net present value (using a discount rate equal to the appropriate market rate).
The Paris Club General Secretariat computes the reduced interest rates to be applied, on the basis of the characteristics of the debt treatment. Standard tables are made available to both the creditors and the debtor: these tables define the reduced rate to be applied using as an input 1) the appropriate market rate; 2) the cancellation rate of the claims to be treated.
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